Measures to ease the credit crunch at the weekend G7 meetings would help strengthen risk appetite early next week.
The G7 meetings will be watched closely on Friday and over the weekend given the potential for a significant impact on market trends. Two key themes are likely to be under discussion over the next few days. The most important element will be discussions on the global credit crunch and risks to the financial system.
G7 member countries will look at proposals to help ease global credit difficulties by relaxing collateral conditions in order to boost market liquidity. Any increase in confidence that the authorities can improve credit conditions would tend to boost risk appetite. This in turn would also tend to weaken the yen.
Comments surrounding exchange rates will also be watched very closely and there are likely to be important discussions between Euro-zone and US officials. A more robust stance in support of the dollar would underpin the currency. In contrast, any evidence of serious policy disagreements would risk further selling pressure on the US currency early next week